Overview of the 2014 Tax Increase Prevention Act

In the recently enacted “Tax Increase Prevention Act of 2014,” Congress has once again extended a package of expired individual, business, and energy provisions known as “extenders.”  Several provisions in particular can produce significant tax savings for 2014 income tax returns – but quick action (before January 1, 2015) may be needed to take advantage of some of them.

Below are only a few key provisions extended through 2014.  To get full details, please contact your accountant or click here to view the entire Bill.


Individual Extenders

  • the $250 above-the-line deduction for teachers and other school professionals for expenses paid or incurred for books, certain supplies, equipment, and supplementary material used by the educator in the classroom;
  • the exclusion of up to $2 million ($1 million if married filing separately) of discharged principal residence indebtedness from gross income;
  • the deduction for mortgage insurance premiums deductible as qualified residence interest;
  • the above-the-line deduction for qualified tuition and related expenses; and
  • the provision that permits tax-free distributions to charity from an individual retirement account (IRA) of up to $100,000 per taxpayer per tax year, by taxpayers age 70 1/2 or older.

Business Extenders

  • the research credit;
  • the new markets tax credit;
  • the work opportunity tax credit;
  • 15-year straight line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements;
  • 7-year recovery period for motorsports entertainment complexes;
  • 50% bonus depreciation (extended before January 1, 2016 for certain longer-lived and transportation assets);
  • the increase in expensing (up to $500,000 write-off of capital expenditures subject to a gradual reduction once capital expenditures exceed $2,000,000) and an expanded definition of property eligible for expensing;
  • the special treatment of certain dividends of regulated investment companies (RICs)
  • the basis adjustment to stock of S corporations making charitable contributions of property; and
  • two provisions dealing with multi-employer defined benefit pension plans (dealing with an automatic extension of amortization periods and shortfall funding method and endangered and critical rules), are extended through 2015.

Energy-Related Extenders

  • the incentives for biodiesel and renewable diesel;
  • the credit for construction of energy efficient new homes;
  • the energy efficient commercial building deduction;
  • the incentives for alternative fuel and alternative fuel mixtures; and
  • the alternative fuel vehicle refueling property credit.

Call J.Freeman & Associates at 864-331-4400 or email to set up an appointment to discuss year-end planning and to plan ahead for 2015.